Good or bad for MHR? - Obama order coordinates federal oversight of 'fracking,' gas development

By Andrew Restuccia - 04/13/12 President Obama signed an executive order Friday establishing a high-level task force charged with coordinating federal oversight of domestic natural-gas development. The task force is charged with ensuring that rapidly growing efforts to tap vast natural-gas supplies in the country’s shale formations, which require advanced drilling techniques including “fracking,” are “safe and responsible.”

The order seeks to find a balance between encouraging expanded domestic natural-gas development, a position Obama has touted in a series of speeches in recent months, and ensuring that the administration protects the public.

“t is vital that we take full advantage of our natural gas resources, while giving American families and communities confidence that natural and cultural resources, air and water quality, and public health and safety will not be compromised,” the order says.

The Obama administration is taking new steps to increase federal oversight of hydraulic fracturing, or fracking, a drilling method that has helped usher in a natural-gas boom but brought with it environmental concerns.

The Environmental Protection Agency is slated to unveil final oil-and-gas air pollution regulations next week that would cut smog-forming and toxic emissions from wells developed with fracking. Separately, the Interior Department will soon float rules for fracking on public lands.

“While natural gas production is carried out by private firms, and States are the primary regulators of onshore oil and gas activities, the Federal Government has an important role to play by regulating oil and gas activities on public and Indian trust lands, encouraging greater use of natural gas in transportation, supporting research and development aimed at improving the safety of natural gas development and transportation activities, and setting sensible, cost-effective public health and environmental standards to implement Federal law and augment State safeguards,” the executive order says.

The order sets up a task force to “facilitate coordinated Administration policy efforts to support safe and responsible unconventional domestic natural gas development.”

The task force is being run through the Domestic Policy Council and will be chaired by White House energy adviser Heather Zichal. Members will include “deputy-level representatives” from the Defense Department, Energy Department, Interior Department, Commerce Department and the Environmental Protection Agency, among other federal agencies.

Fracking involves high-pressure injections of sand, water and chemicals that allow natural gas trapped in rock formations to flow.

The practice, combined with advances in horizontal drilling technology, have enabled major growth in natural-gas production from shale in recent years.

The federal Energy Information Administration estimates that shale gas will grow from 23 percent of U.S. gas production in 2010 to 49 percent in 2035.

EIA, in a report earlier this year, projected that total U.S. gas production will rise from roughly 22 trillion cubic feet in 2010 to around 28 trillion cubic feet in 2035.

However, fracking critics warn of the potential for environmental damage, including polluted groundwater. The EPA is conducting a study of the public health effects of fracking.

The Business Roundtable, in a statement Friday, welcomed the new interagency group but used its arrival to launch fresh warnings of “burdensome” federal rules.

“Today's executive order is a solid first step toward coordinating and, we hope, improving federal oversight of hydraulic fracturing,” said John Engler, the business group’s president.

“Business Roundtable CEOs recently discussed with the President how federal handling of this technology threatened to become burdensome, with overlapping authorities and unnecessary and duplicative rules. We hope this working group can cut through these complications and ultimately encourage further investment in the energy sector,” added Engler, who is a former governor of Michigan.

Zichal met with several industry groups at the White House Friday ahead of the announcement, including the American Petroleum Institute, the American Gas Association and the National Association of Manufacturers.